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Transcript – Season 3 Episode 6: Beyond the targets: What type of homes do we need?

Episode 6: Beyond the targets: What type of homes do we need?

March 2021

The UK Government’s ambition is to build 300,000 new homes a year, and one million by the end of this parliament. But there are continued concerns among the public about the affordability of housing across the country, particularly when we begin to see the impact of COVID-19 on employment and income. So if they need to get on and build more affordable housing, shouldn't we also be talking more about the types of homes to be built?

In this episode, host Evie John, from PwC’s housing team, is joined by Lord Barwell, a strategic adviser to PwC, who was a former minister of state for housing and James Bailey, a director in PwC’s Real Assets team who leads our work across the residential market. They discuss how different policy priorities need to be balanced, from quality and safety to net zero and placemaking; and how the Government, builders and developers can come together to deliver the next generation of housing.

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Transcript

Evie John:

Welcome to the latest episode of our reimagining capital projects podcast. I am Evie John, a senior manager in our housing team, working with local government, central government, and housing associations, on housing and place related issues. I am your host for today’s episode. The topic for this podcast is what kind of homes do we need.

I am delighted to be joined by Lord Gavin Barwell, a strategic advisor to PwC, former minister of state for housing, and also chief of staff to the former prime minister, Theresa May; and James Bailey a director in our deals business, who leads our work across the residential market. Welcome, both.

Gavin Barwell:

Thanks, Evie. Pleasure to be with you today.

James Bailey:

Thanks, Evie.

Evie:

The UK Government’s ambition is to build 300,000 new homes a year and one million by the end of this parliament. We’ve seen from our own research that issues around affordability are really concerning the public. If we need to build more, and we need to think about affordability, why are we spending time today talking about types of homes we should be building?

Gavin:

Shall I go first, Evie? For three obvious reasons. The first is, it’s not just about quantity. If you think about what we need to do in terms of decarbonising our economy, we need to make sure that the new homes we build are more environmentally sustainable. If you think about all we’ve been through over the last year with the pandemic, it has taught us the importance, not just of the homes in which we live, but also the gardens and public spaces around them. Thinking back to when I was housing minister and trying to make the case for building more housing, politically, good design and also well-planned communities, can actually help make the case for more housing. Quality and quantity aren’t two separate issues, actually good quality can help get the homes that we so desperately need built.

James:

Great, thanks for that Gavin. Just a couple of things to build on that from my perspective. Firstly, our own ‘future of government’ research indicates that in every single region across the UK, the vast majority of communities, state that access to better quality and more affordable housing is regarded as the most effective means of ‘levelling up’ and reducing inequality, and that’s really important.

Secondly, we need to recognise that within that ‘levelling up’ needs to go deeper than just a simple North/South divide. It needs to address inequalities within regions, and within communities; and needs to address inequalities across different generations. If we are going to do that, then what people are telling us is that access to high quality housing is absolutely essential.

Evie:

Thanks James, thanks Gavin. It is a bit of a relief that we are talking about something that’s worth talking about. From both of you, the first things that you’ve said, it does definitely feel that there are a lot of lessons to learn from the past as well in relation to where we have prioritised volume, output, delivery, and we have often sacrificed thinking about the type of homes that we need to build, and the role of housing, and the economic performance of places, and have maybe created the regeneration programmes that we are actually looking at today. It would be good to unpack a little bit more, those quality, and beauty issues that we are currently talking about.

Gavin, if I can, can I start with you? We’ve just had the Planning white paper, we’ve had the Building Better, Building Beautiful Commission, and lots of policy terms around beauty and quality… What does that really mean in terms of the Government agenda?

Gavin:

As you said, it’s one of those areas where we’ve actually got a high degree of confidence about what the Government’s policy is, because the white paper in particular set out quite a lot of detail. Before I run through, maybe four or five of the key things that were in there, it’s worth saying this is something that the secretary of state, Robert Jenrick, is personally really committed to. When you hear him talk about this subject, it feels like that bit of the white paper is very much personal to him, and comes from him, whereas, maybe some of the other elements were something that were developed between the department and number 10.

I would say, if you read the design bit of the white paper, there are probably five key ideas there. The first is the new development shouldn’t just do no net harm to the environment, but it should give net gains in terms of both the built and natural environment. A higher threshold, if you like, the new development has to get over. The second is this idea of local authorities having local design codes that give a clear steer to developers, what kind of design they are looking for. You talked about the lessons of the past - try to ensure that we don’t just get identical homes built across the whole country, but that we are sympathetic to local materials, and the local aesthetics, essentially.

The third idea is that, within each local authority, there should be a chief officer responsible for design, so trying to make sure within our planning system, we develop people who have got real expertise in this area. The fourth, which, maybe comes back to your original question, Evie, about the link between quality and quantity, is the idea of having some kind of fast track within the planning system for beautiful buildings, to try to incentivise developers to put an emphasis on beauty.

Then the final thing, which is more really an internal workings of government issue, is about making design, fitting design in somehow to the strategic objectives of Homes England, which is, I am sure, most people listening to this podcast know, the key government agency that works with the department in trying to get the homes that we need in this country built.

James:

Thank you, Gavin. It’s really important to add, Evie, to your point, that quality isn’t just beauty. It is fair to say that we all have the right to expect that the homes that we live in are both safe and fit for purpose, and that’s as important as the beauty aspect. In that context, the Government’s Building Safety Bill is clearly a significant step in the right direction. As we know, it’s the biggest change to building safety in over forty years, and it builds on the findings of the review of building regulations and fire safety post-Grenfell. This is a really important piece of legislation that the Government is bringing in. By placing the emphasis on building safety and resident safety throughout the life cycle of the home, we are hopeful that we should be better placed to make sure that the homes we are all building going forward are not just beautiful, but they are also much better quality.

It’s also important to add, that while the emphasis of this podcast is on how we create the next generation of housing for the future, we should recognise that a number of existing homes continue to be deemed at risk from a building safety and fire safety perspective. We know that the Government has made £5 billion available to fund specific works to those homes, and that’s clearly a welcome intervention.

Evie:

It does strike me that there is a lot in there from what James just said about safety and about funding that safety; and equally, what you said Gavin, around design and beauty. That does feel like it relies on significant delivery and strategic capabilities at a local level. Do we feel like local government, communities, house builders, have what they need to help translate policy intention into policy reality?

Gavin:

If you speak to any developer, they will say they’ve got real concerns about the capacity of local authorities, planning departments. They have been deprived of resources over the years. A couple of years ago, when I was minister, we gave local authorities power to increase their planning fees a bit to try to address that, but there is more the Government needs to do to make sure that planning departments right across the country have got the capacity they need to cope with all of this work.

In terms of local communities, it’s incredibly variable. One of the real challenges that the Government has got here is to make sure that this agenda about beauty, about quality of design, is not just something that’s taken up in the more affluent parts of the country, where there are plenty of concerned resident associations that will want to get involved in this debate, but it is something that’s universal, that makes a real difference to the kind of buildings that we are building in every single corner of the country.

Evie:

Do you think there is a role there for Homes England? We are very quick in the housing sector to jump to investment and quite understandably in capital assets, physical assets. Is there a role for Homes England to perhaps invest in capabilities in generating some of that expertise that’s required?

Gavin:

There’s definitely a role to invest in capabilities. Whether that should be part of Homes England remit, that’s a really interesting question. The Government has just asked Peter Freeman, the chair of Homes England, to conduct a review of how the agency is best supporting government policy, and that’s maybe a really good idea to feed into that review. Do you want an agency that’s really narrowly focussed on getting the homes built, or do we actually see it potentially having a role in helping to improve capability, both in communities, and in local authorities is a really interesting suggestion.

Evie:

Thanks Gavin, I just wanted to cycle back to something that you touched on earlier in relation to environmental commitments and the Government’s priority in relation to net zero. Housing has often had an uneasy relationship with environmental challenges and concerns given that house building itself can be quite a destructive process. What do you think the housing sector can do to mitigate some of those consequences?

James:

That’s a really good question, Evie, and it’s quite helpful to set the scene bit. Relevant here is the fact that the UK is the first major economy to set a legally binding commitment to net zero emissions by 2050. Clearly getting there is going to take a lot of work, a lot of investment. PwC have estimated that it will require around £400 billion worth investment in new low-carbon and digital infrastructure over the next 10 years. Clearly, within that housing is going to be a key area where attention needs to be placed, not least because, it is estimated that about 22% of all greenhouse gas emissions comes from heating and powering homes, but also we need to recognise that the homes that we are building today, are the homes that are going to be with us in 2050 and beyond. Therefore, investing in them in the right way today is going to be absolutely essential.

To that end, in my view anyway, the Government’s aim for housing to be zero carbon ready by 2025, represents a huge opportunity for the sector. To deliver housing that’s producing 75% to 80% less CO2 emissions, make homes warmer, and reduce customer’s energy bills, requires a rethink around how we do that. I am excited to see the opportunities that creates for things like modern methods of construction. It has always been a feature of the market, but perhaps hasn’t moved into the mainstream as much as we need it to. It’s a great opportunity for that to happen now. I also think it is really exciting for the opportunities for collaboration between the traditional construction sector along with the energy and sustainability sectors, and actually how can those come together to rethink what it is to be a house and what it is to make a home, and ultimately create the next generation of housing in the context of meeting those 2050 targets.

Gavin:

Of course, in addition to the work that we need to do on improving the environmental performance of the new homes we build, actually when it comes to net zero, the biggest job is to decarbonise all of our existing stock. Most of the homes that we are going to have in this country in 2050 are already standing today. Many of them were built quite a long time ago to much lower standards, so there is a huge job to do there. The chancellor launched a scheme to fund some of that work, a short-term scheme as part of the stimulus, back last March, and take up has not been great, and it has not been extended. The Government really needs to think about how it's going to work with people to encourage them to make the adaptations to their homes that are needed to get them up to scratch.

Evie:

From the discussion we’ve been having, it does feel that policy making in housing can be very narrowly focussed on bricks and mortar, but then you end up in a place of unintended consequences as we have in some of the environmental performance of some of the homes we have built in the past. But we also miss the opportunities to achieve wider policy goals such as net zero. This is also relevant in the wider placemaking agenda. Gavin, what do you see is the relationship housing has with placemaking and places?

Gavin:

This is an idea that has really grown in recent years, that actually, and again it links back to your first question, about how do we get the number of homes built that we need? But, actually, if you can design good overall places, that’s going to make it much more likely that residents are going to support planning applications. And, clearly, new communities are not on their own going to be the sole solution to our housing needs, but they are going to be an important contributor to it. You could think of all kinds of areas of public policy, where placemaking can make a really significant contribution.

You think about what we are just talking about in terms of net zero, it is not just about the environmental performance of the homes we live in, it’s about trying to ensure that more of us live close to where we shop, where we go out, where we work in order that you don’t get the same level of emissions from people traveling significant distances every day. If you think about public safety and the Government’s ambition to reduce crime, and make people feel safer in their communities, a lot of that is about the way communities and places are designed at the outset in order to avoid features that leave people vulnerable potentially to crime.

If you think about the wider issue of social cohesion intergenerational relationships, if that is all about trying to build mixed communities, where you’ve got people of different age groups, people of different social classes living together in viable communities, rather than people separated into different areas of local authority. This placemaking agenda is something that has rightly come, not just for the local authorities when they are thinking about their role in the planning system, but increasingly for developers.

James:

Housing and the types of homes that we do provide is clearly essential to creating a positive, vibrant, and inclusive community, which has to be the aspiration and ambition. From a placemaking perspective, there are lots of ways you can look at that. Two areas that are particularly interesting to me, as trends which will take root. The first is, it is really important to offer a greater choice of tenure. As you’ve alluded to there, Gavin, it is essential to create genuinely mixed communities to be able to offer housing to a range of different tenants, and different demand profiles and so on. We are speaking to a number of my clients around the importance of a strong rental offering, in particular, things like single family housing in suburban, in urban fringe locations, which are available for rent, they provide the opportunity for mobility, but also for families to settle into those areas, but rent rather than buy. There seems to be a growing recognition of that as a part of the market, which is undersupplied, and which can be increased going forward.

The second bit for me, we should also be thinking about the role that housing can play in the regeneration and revitalisation of our town centres and high streets, where we can think about repurposing some of the assets, some of the community assets, and so on, that we have in those areas, repurposing them towards housing, so that we can continue to keep those places as areas that we all enjoy living, working and playing in. It has got an important role to play in the placemaking story going forward.

Evie:

There is so much to explore in what you’ve both said. I also think housing has a very direct, or can play a very direct, role in the economic performance of local places, by just providing good quality jobs and the opportunity to build skills, and that is particularly important, as we are looking at the economic challenges that are laid out in front of us following the pandemic - that housing actually may well be best placed to play a lead role in addressing some of these things.

We’ve had a really wide-ranging conversation around the type of homes that we think should be built in the future, there were lots of different elements in what we’ve talked about. What do you think is the key thing to prioritise? Hhow do we balance all of those opportunities that we’ve talked about today?

Gavin:

There are some synergies, as we’ve said, there are some things where actually doing better on beauty, on design, on thinking about placemaking, isn’t in conflict with trying to build more homes, that actually helps you to get greater local support for house building. But there are definitely some tensions and we should just be honest about that up front. Safety has to come first, it’s a legal requirement to get that right. It has taken too long, if we are honest, for the Government to address the properties around the country, the work needed in the aftermath of the Grenfell fire. That’s got to come first. The trade off in terms of the decarbonisation of the existing stock and the environmental quality of what we build new, is what the Government really needs to get its head around. I sit on the board of a housing association, and if the Government doesn’t provide some financial help with retrofitting, that is bound to have an impact on the number of new homes that that association can build every year going forward.

There is a clear trade off there, where the Government is going to have to think about resources and also in terms of supply chains, we’ve got to think through, if we’ve got a huge retrofitting program going on, is that going to take away some of the people that would usually be involved in building new homes and how do we make sure that we’ve got the workforce that can cope with all of these priorities at the same time.

James:

I agree with pretty much all of that. The one thing I would add, though, is that it is important to recognise that priorities will be different across the various communities across the country, and we do need to develop solutions that recognise that. As I look at it, if we focus on the kinds of outcomes we want to create for those communities, with those communities, then we do have to think through the types of partnership that we need to put in place to enable that.

I am thinking how do we use the public sector, whether that’s central government, agencies like CLG, Homes England, all local government and local authorities, what role can they play as convenors, as planning authorities, as enablers, to work with communities, but also importantly to work with house builders, and developers, and investors to make sure that we are bringing together the right skill sets to be able to create the right homes in the right places, and importantly with the right carbon credentials, to make sure that, as we are thinking about placemaking, and all the aspects of quality and beauty with the full range of resources that are available to us in the right types of partnerships to enable all of that.

Evie:

We’ve had a really wide-ranging rich debate, it does feel like we need another podcast on this just to talk through some of the ‘levelling up’ issues that have been raised, the issues around beauty and place.

I just wanted to thank you so much, Gavin and James, for a fascinating discussion, and of course to everyone who has been listening. Like many of the issues we discussed on this Reimagining Capital Projects series, the challenges and opportunities we’ve explored on the podcast, are just part of a beginning of a larger conversation.

So, do look out for more content on our website at www.pwc.co.uk/realassets. Finally, don’t forget to subscribe to this podcast series.

Thanks everyone and see you next time.

 

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